The government on 20 March 2018 decided to implement direct benefit transfer (DBT) for fertilizer subsidy payments across India, seeking to prevent diversion of fertilizers for commercial use and generate data on the usage of the nutrients to help farmers.
At the time of the sale, details of the buyer, the quantity, Aadhaar number, land records wherever available and soil health will be captured using a point-of-sale machine. The subsidy amount will be settled in a few days with the manufacturer, which will end the precedence of subsidy in the fourth quarter spilling over to the next fiscal.
The department of fertilizers has already rolled out the programme in most states, data from which shows that transaction time and alleged instances of overcharging by retailers have come down. Also, offtake has moderated, suggesting that overuse of subsidized fertilisers and their diversion for industrial use have declined. As a result, the Union government could limit the fertilizer subsidy for 2017-18 to Rs64,999 crore in the revised budget estimate, down more than 7% from the initial estimate made at the beginning of the fiscal year.
The subsidy for locally produced and imported urea is part of the annual fertilizer subsidy outgo, which also covers similar spending on phosphatic and potash fertilizers. For FY19, the government has allocated Rs70,090 crore as total fertilizer subsidy. Direct transfer of entitlements is now adopted in a large number of government schemes to reduce delays, remove fake beneficiaries and ensure better targeting of subsidy.